Anchor Intro: According the Center for Responsible Lending, banks collected more than $17 billion in fee income last year. And one of the biggest sources of that income? Overdraft fees. But if you know the traps to look for, you can avoid contributing your hard-earned money to a bank's bottom line. Bankrate.com has the story.
Voice over 1: It's hard to live without a checking account. But it's also hard to live with the fees you can rack up if you overdraw it.
Voice over 2: And banks' practices can cause you do it. For example, many banks clear checks by size rather than sequence.
Voice over 3: For example, say you have $1,000 in your account. You write four checks throughout one day: three for $20, then the last one for $1,000. In order written, only the last would bounce. But if they arrive together, most banks will clear the $1,000 first. Result? Three bounced-check fees instead of one.
Voice over 4: Here's another snare: You assume your debit card will be rejected if there's no money in your account. Wrong. Nearly half of insufficient fund charges are from debit cards.
Voice over 5: Which leads to trap number three: When you overdraw your account, the bank pays it. They call it a courtesy overdraft -- essentially a loan, one that needs to be repaid quickly. Some banks will charge another 30 bucks if you don't repay the courtesy overdraft within a week.
Voice over 6: So how do you avoid these tricks? You protect yourself. You keep your account reconciled. You don't record a $100 deposit, so you have a pad. You tie in a savings account or credit line.
Standup: If you do get nailed by a fee, call your bank and ask for a fee refund. If you're a good customer, you might catch a break. Also, credit unions normally, although not always, have fewer fees. So you might want to check them out. For Bankrate.com, I'm Kristin Arnold.